Turbulent times in tyre town

It has not been the best 12 months for Goodyear or its employees. 2023 might mark the company’s 125^th anniversary, but the combination of already-announced global job cuts, European manufacturing restructuring and ongoing cost-cutting operations mean that for many individual workers it may be their last (see page 14 of the June print edition onwards of complete coverage).

For example, as we went to press, Goodyear announced that the company is cutting up to 50 per cent of the jobs at its tyre factory in Fulda, Germany, which will result in “a similar sized” cut in tyre production. Since around 1100 people have been employed at the Fulda tyre factory up till now, that means around 550 jobs will be cut.

Writing in an official statement, Goodyear confirmed that it has “initiated a consultation” on the subject: “It is a difficult but necessary choice we need to make to improve our cost structure by decreasing high-cost capacity and optimizing use of the remaining plants in the EMEA manufacturing footprint.

However, while production is being slashed in the city of Fulda, Goodyear representatives said the announcement “will not impact the Fulda brand which remains in our multi-brand product portfolio”, adding: “Fulda tyres are produced in several manufacturing facilities in EMEA, and they will continue to be supplied to customers in Germany and other EMEA markets.”

Asked whether further production cuts at Fulda or other European manufacturing plants are planned, officials replied: “There will not be other announcements about the manufacturing footprint in EMEA at this time. As we announced at the beginning of the year, the manufacturing footprint review considers all plants in the EMEA manufacturing network to balance our capacity, capability and cost to meet market demands. The announcement we are making today is the result of this review.”

Back on home turf on the other side of the Atlantic, Goodyear executives are being forced to operate defensive manoeuvres following the intervention of a particularly vocal and proactive shareholder – Elliott Investment Management. Elliott wants to re-shape Goodyear’s board and for the company to sell of its North American tyre retail operations, amongst other things.

However, within a couple of weeks of Elliott’s bombshell letter, TBC Corporation, a leading tyre distributor in North America, announced that it has agreed to sell its company-owned retail portfolio to Mavis Tire Express Services Corp. Specifically, Mavis will acquire 392 NTB Tire and Service Centers (NTB) and 203 Tire Kingdom Service Centers (Tire Kingdom). In connection with the deal, Mavis and TBC have entered into a distribution agreement, through which TBC will provide wholesale and tyre distribution for Mavis retail locations.

TBC was bought by Sumitomo Corporation of America (SCOA) in 2005. In 2018, Michelin North America and Sumitomo Corporation of Americas combined their operations to create National Tire Wholesale. In other words, while Goodyear must bring in its defensive line as a result of some friendly fire from its own shareholders, Goodyear’s competitors are a) going on the offensive and b) undermining a key point in Elliott’s supposed rescue plan.

It’s not about pointing the finger. Rather, when one of the world’s largest tyremakers, which holds some of the best-known tyre brands out there gets hit, everyone feels it. That’s why this month’s magazine presents a detailed analysis of what led up to the current circumstances. That means incisive op-ed coverage from those with first-hand experience on the ground in the USA (see pages 14 to 15 in the June print edition) as well an in-depth critical evaluation of Elliott’s proposals in a bid to weigh up their feasibility (see pages 16 to 27).

At the same time, we are also maintaining our regular schedule of news, reviews and analysis. In parallel with the topical coverage, the June edition of the magazine also features our annual tyre retail ranking, which provides details relating to the relative growth of the top 25 tyre retail chains in the UK. As well as highlighting the growth and decline of some of the biggest tyre retailers this side of the channel, which are some of the biggest in countries within the continent of Europe, we also identify some of the fast risers beyond that scale (see page 28).

And our annual look at the ever-popular high-performance tyre sector represents another key part of this month’s magazine (see page 40 onwards).

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